Cost of credit continues to rise

The cost of credit has risen across Europe as a result of the downturn adding to the pressure on cash strapped channel firms looking for finance. There have been numerous calls for the banks not only to increase their lending but also to do so at realistic rates.

The cost of credit has risen across Europe as a result of the downturn adding to the pressure on cash strapped channel firms looking for finance.

There have been numerous calls for the banks not only to increase their lending but also to do so at realistic rates from the likes of the Forum of Private Business (FPB) but research from Siemens Financial Services (SFS) shows that problems persist.

In a survey of firms in the UK, Germany and France the feedback covering the first quarter was that borrowing had not only become more expensive but 50% of British businesses revealed they had seen their credit lines reduced by banks.

In the UK 68% of companies expected further credit caps this year and 74% predicted arise in the cost of credit.

Derek Ryan, sales director at SFS, said that the indications were that the squeeze on credit would continue.

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